Mega First Corp. Bhd. · MYX:MFCB
Mega First Corp. Bhd — Q1 2022 Earnings Presentation
72 slides from Mega First Corp. Bhd's earnings presentation, May 26, 2022
Slide 1: 1Q2022 Results Briefing
1Q2022 RESULTS BRIEFING 26 MAY 2022
Slide 2: Agenda
AGENDA 1. 1Q2022 financial review: - Earnings review - Balance Sheet review - Cash Flow review - Gearing position - Other updates 2. Prospects for remaining quarters in 2022 For reference: 3. Renewable Energy Division 4. Packaging Division 5. Resources Division 6. Investment in joint venture Edenor
Slide 3: 1Q2022 Earnings Overview
1Q2022 EARNINGS OVERVIEW Group Earnings Breakdown Key Takeaway: 1Q2022 1Q2021 YoY Change 4Q2021 QoQ Change (RM' 000) (RM' 000) (%) (RM' 000) (%) Revenue ▪ Revenue +40.6% to RM272.4 million: Higher Renewable Energy 125,358 114,235 9.7% 146,641 -14.5% energy sales + strong growth in Packaging. Resourc
Slide 4: Earnings Review - Renewable Energy Division
EARNINGS REVIEW - RENEWABLE ENERGY DIVISION Renewable Energy Division 2021 2022 Change (RM million) 1Q 2Q 3Q 4Q Total 1Q YoY QoQ Revenue 114.2 138.2 134.9 146.6 533.9 125.4 9.7% -14.5% PBT 78.2 98.7 98.8 109.9 385.6 83.0 6.2% -24.5% PBT margin (%) 68.4 71.4 73.2 75.0 72.2 66.2 EAF (%) 81.3 95.2 90.1
Slide 5: MEGA FIRST CORPORATION BERHAD - MAY 2022
MEGA FIRST CORPORATION BERHAD - MAY 2022 4
Slide 6: Earnings Review – Resources Division
EARNINGS REVIEW – RESOURCES DIVISION Resources Division 2021 2022 Change (RM million) 1Q 2Q 3Q 4Q Total 1Q YoY QoQ Revenue 44.6 35.5 31.5 43.3 154.9 45.3 1.7% 4.6% PBT 6.0 4.4 1.9 4.4 16.7 5.3 -11.5% 20.8% PBT margin (%) 13.4 12.4 6.0 10.1 10.8 11.7 1Q2022 vs 1Q2021 Lime product sales volume -4.2%
Slide 7: Earnings Review – Packaging Division
EARNINGS REVIEW – PACKAGING DIVISION Packaging Division 2021 2022 Change (RM million) 1Q 2Q 3Q 4Q Total 1Q YoY QoQ Revenue 30.7 30.0 63.4 84.1 208.2 94.8 209% 12.7% PBT 2.6 1.4 7.5 10.7 22.2 8.8 241% -17.1% PBT margin (%) 8.5 4.7 11.8 12.7 10.7 9.3 1Q2022 vs 1Q2021 Revenue +209%: Hexachase +27.5%
Slide 8: Balance Sheet Review
BALANCE SHEET REVIEW Changes in Key Balance Sheet Items At 31.3.2022 At 31.12.2021 Change (RM million) (RM million) (RM million) Explanation Service concession asset 1,920.8 1,922.3 -1.5 RM20.4 mil amortisation charge partially offset by RM18.9 mil translation gain PPE 427.5 410.4 17.1 RM23.8 mil CA
Slide 9: Cash Flow Review
CASH FLOW REVIEW Cash Flow Analysis 1Q2022 1Q2021 (RM mil) (RM mil) After tax cash from operating activities 161.8 158.2 Net cash inflow from non-operating investment activities 3.3 0.8 New capital from minority of subsidiary 1.4 3.3 Total cash made available to the Group 166.4 162.3 Investing Actvi
Slide 10: Gearing Position
GEARING POSITION Gearing Position At 31.3.2022 At 31.12.2021 At 31.12.2020 At 31.12.2019 (RM mil) (RM mil) (RM mil) (RM mil) Total Cash 356.1 257.6 93.6 91.0 Total Debt -756.8 -777.9 -657.9 -746.1 Net Debt -400.7 -520.2 -564.3 -655.1 Equity 2,780.8 2,739.6 2,165.6 1,711.9 Net Debt/Equity Ratio 14.4%
Slide 11: Other Updates
OTHER UPDATES Idaman Harmoni (“IHSB”) RM22.8 million (before penalty) tax dispute with IRBM: - On 1 September 2021, SCIT dismissed IHSB appeal. - On 18 April 2022, the High Court allowed IHSB appeal. - On 20 April 2022, IRBM filed appeal to the Court of Appeal (apex court). - Court of Appeal has f
Slide 12: Prospects for Remaining Quarters of 2022
PROSPECTS FOR REMAINING QUARTERS OF 2022 Key challenges to manage in 2022: - Global supply chain disruptions; - Escalating inflationary cost pressures; - Rapidly rising interest rate environment; and, - Tight labour market. The Group has so far navigated these challenging times by exercising pru
Slide 13: Prospects for Remaining Quarters of 2022 (Cont'd)
PROSPECTS FOR REMAINING QUARTERS OF 2022 (CONT’D) Renewable Energy Division EAF in 2Q2022 to be higher than 95.2% in 2Q2021 on sustained higher water levels this dry season. EAF in 2H2022 (wet season) expected similar to 2H2021. Beneficiary of strengthening USD against MYR. Average USD:MYR exc
Slide 14: Renewable Energy Portfolio Summary
PROSPECTS FOR REMAINING QUARTERS OF 2022 (CONT’D) Renewable Energy Portfolio Summary MEGA FIRST CORPORATION BERHAD - MAY 2022 13
Slide 15: Renewable Energy Division – Expansion
RENEWABLE ENERGY DIVISION – EXPANSION New Projects On Hand 65 MW 5th turbine expansion of Don Sahong costing approx. US$65-70 million or approx. US$1- 1.1mil/MW (vs US$1.4 mil/MW for the first 4 turbines). Construction commenced in Dec 2021. Expected completion in 3Q2024. Expected EAF 41%. Secur
Slide 16: Renewable Energy Division – 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - MAY 2022 15
Slide 17: Renewable Energy Division – 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS DECEMBER 2021 MAY 2022 FEBRUARY 2022 MAY 2022 MEGA FIRST CORPORATION BERHAD - MAY 2022 16
Slide 18: Renewable Energy Division – 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - MAY 2022 17
Slide 19: Prospects for Remaining Quarters of 2022 (Cont'd)
PROSPECTS FOR REMAINING QUARTERS OF 2022 (CONT’D) Resources Division Operating environment to remain fluid and challenging. Cost pressures mainly from higher fuel and energy costs are mounting. Domestic and regional demand projected to remain firm, but margins under pressure. Proactive and p
Slide 20: Prospects for Remaining Quarters of 2022 (Cont'd)
PROSPECTS FOR REMAINING QUARTERS OF 2022 (CONT’D) Packaging Division Hexachase: Top line demand growth momentum to continue. Continuous supply chain issues and a tight labour market could pose risks to this growth assumption. Impact of higher raw material costs and other inflationary pressures
Slide 21: Packaging Division 5-Year Expansion Plan
PROSPECTS FOR REMAINING QUARTERS OF 2022 (CONT’D) Packaging Division 5-Year Expansion Plan MEGA FIRST CORPORATION BERHAD - MAY 2022 20
Slide 22: Share of Profit in Joint Venture and Associates
PROSPECTS FOR REMAINING QUARTERS OF 2022 (CONT’D) Share of Profit in Joint Venture and Associates Edenor Technology Group (equity interest: 50%) - Recorded profit after tax of RM7.85 million (MFCB share RM3.93 million) on RM331 million revenue in 1Q2022 on successful restructuring under favourable
Slide 23: Renewable Energy
(Remaining Slides for Reference) RENEWABLE ENERGY DON SAHONG HYDROPOWER & COMMERCIAL AND INDUSTRIAL SOLAR MEGA FIRST CORPORATION BERHAD - MAY 2022 22
Slide 24: Renewable Energy Division – Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG MEGA FIRST CORPORATION BERHAD - MAY 2022 23
Slide 25: Renewable Energy Division – Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG 260 MW run-of-river hydropower project located on the mainstream of the Mekong River in southern Laos. High projected average Energy Availability Factor (EAF) of 89% (2021: 91%) compared to other large hydro of between 40-70%. Projected average energy gen
Slide 26: Renewable Energy Division – Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - MAY 2022 25
Slide 27: Renewable Energy Division – Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - MAY 2022 26
Slide 28: Renewable Energy Division – Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG Don Sahong: 2021 Year to date Pakse Water Level and EAF Pakse Water Level - 2021 vs 2020 Capacity Factor/EAF- 2021 vs 2020 9.00 110.0% 8.00 100.0% 7.00 6.00 90.0% 5.00 4.00 80.0% 3.00 2.00 70.0% 1.00 0.00 60.0% 1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-
Slide 29: Renewable Energy Division – Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - MAY 2022 28
Slide 30: Renewable Energy Division – Financial Highlights
RENEWABLE ENERGY DIVISION – FINANCIAL HIGHLIGHTS 5-Year Earnings Summary 2017 2018 2019 2020 2021 (RM million) (RM million) (RM million) (RM million) (RM million) Revenue - Energy - - 35,086 510,214 533,864 - Construction 645,441 656,228 435,289 - - 645,441 656,228 470,375 510,214 533,864 Profit bef
Slide 31: Renewable Energy Division – Strategy & Strength
RENEWABLE ENERGY DIVISION – STRATEGY & STRENGTH Strategy Leveraging current strong and stable cashflow of approx. RM450 mil per annum from existing RE portfolio to pursue selective RE opportunities in the region. Strength Strong project management/execution track record → Don Sahong completed si
Slide 32: Renewable Energy Division – Investment Approach
RENEWABLE ENERGY DIVISION – INVESTMENT APPROACH New investments must fulfil the following criteria: 1) Attractive project IRR (varies between markets) 2) Project manageability 3) Project bankability 4) Project risk acceptability Avoid herd instinct Strict investment discipline MEGA FIRST CORPO
Slide 33: Packaging
PACKAGING PAPER BAGS AND FLEXIBLE PACKAGING PRODUCTS MEGA FIRST CORPORATION BERHAD - MAY 2022 32
Slide 34: Packaging Division
PACKAGING DIVISION Mission statement: “To become a leading provider of innovative, environmentally sustainable, safe and competitive packaging solutions” The division currently manufactures and sells paper bags, flexible plastic packaging, and stickers and labels. Global trends: Consumers and our
Slide 35: Packaging Division – Differentiating Strategy
PACKAGING DIVISION – DIFFERENTIATING STRATEGY We develop packaging solutions that promote the use of ONLY fully recyclable materials (e.g. paper and mono- family plastic materials). Malaysia’s first and only manufacturer that only uses 100% toluene-free print ink and solvent-free lamination proc
Slide 36: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY New Fuji Kikai 14 colours Rotogravure Printing Machine commissioned in 1Q2022 Fuji Kikai Printing Machine MEGA FIRST CORPORATION BERHAD - MAY 2022 35
Slide 37: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY New Super combi 5000 Lamination Machine Super Combi 5000 MEGA FIRST CORPORATION BERHAD - MAY 2022 36
Slide 38: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Flat Handle Paper Bag Machine Twisted Handle Paper Bag Machine MEGA FIRST CORPORATION BERHAD - MAY 2022 37
Slide 39: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY SOS Machine Flat & Satchel Bag Machine MEGA FIRST CORPORATION BERHAD - MAY 2022 38
Slide 40: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY MFCB acquired Stenta in July 2021. Reifenhauser LLDPE Line Vacuum Metallizer MEGA FIRST CORPORATION BERHAD - MAY 2022 39
Slide 41: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Reifenhauser LLDPE Line Vacuum Metallizer MEGA FIRST CORPORATION BERHAD - MAY 2022 40
Slide 42: Packaging Division – State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Bruckner OPP Line High Capacity Roll Slitting and Winding Machine MEGA FIRST CORPORATION BERHAD - MAY 2022 41
Slide 43: Packaging Division – Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - MAY 2022 42
Slide 44: Packaging Division – Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - MAY 2022 43
Slide 45: Packaging Division – Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - MAY 2022 44
Slide 46: Packaging Division – Customer Base
PACKAGING DIVISION – CUSTOMER BASE MEGA FIRST CORPORATION BERHAD - MAY 2022 45
Slide 47: Packaging Division – Financial Highlights
PACKAGING DIVISION – FINANCIAL HIGHLIGHTS 5-Year Earnings Summary 2017 2018 2019 2020 2021 (RM million) (RM million) (RM million) (RM million) (RM million) Revenue 51,211 57,433 68,427 97,775 208,217 Profit before tax 740 (4) (501) 9,461 22,219 MEGA FIRST CORPORATION BERHAD - MAY 2022 46
Slide 48: Resources
RESOURCES LARGEST QUICKLIME PRODUCER IN MALAYSIA MEGA FIRST CORPORATION BERHAD - MAY 2022 47
Slide 49: Resources Division
RESOURCES DIVISION MEGA FIRST CORPORATION BERHAD - MAY 2022 48
Slide 50: Resources Division - Profile
RESOURCES DIVISION - PROFILE Largest quicklime producer in Malaysia with 1,960 tonne per day installed kiln capacity. Owned one of the largest limestone reserves, sufficient for more than 100 years supply. Wide industrial applications: steel, mining, pulp and paper, agriculture, construction m
Slide 51: Resources Division – Success Factors
RESOURCES DIVISION – SUCCESS FACTORS Fully integrated facilities Own high purity limestone reserves, on-site and at vicinity High and consistent lime quality Cost leadership Diversified customer base MEGA FIRST CORPORATION BERHAD - MAY 2022 50
Slide 52: Resources Division – Mission & Challenges
RESOURCES DIVISION – MISSION & CHALLENGES Mission To be the leading lime producer in the region. 2015-2018: Completed massive expansion plan. +160% increase in kiln capacity 760 tonnes 1,960 tonnes per day Current plant utilisation rate approx. 80% Near term challenges High and uncertain fue
Slide 53: Resources Division – Mitigating Measures & Financials
RESOURCES DIVISION – MITIGATING MEASURES & FINANCIALS Mitigating measures Export diversion to markets less affected by shipping constraints Expanding customer base to mitigate impact from customer demand volatility Higher stock holdings to lower production disruption and manage price volatilit
Slide 54: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY MEGA FIRST CORPORATION BERHAD - MAY 2022 53
Slide 55: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY A 50:50 JV between MFCB and 9M Technology Sdn Bhd (RM40 million paid up capital). Set up to acquire Emery’s Asia Pacific oleochemical business from Sime Darby Plantation Berhad and PTT GC International Limited (“Acquisition’). The Acquisition was completed on 1
Slide 56: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY Emery’s Asia Pacific business Integrated 300,000-tonne per annum capacity oleochemical complex on a 34-acre site at Telok Panglima Garang. Original plant cost: > RM1.1 billion Plant book value @ 31 Oct 2021: approx. RM430 million Plant Acquisition Value: RM73
Slide 57: Investment in Edenor Technology – Plant Site
INVESTMENT IN EDENOR TECHNOLOGY – PLANT SITE MEGA FIRST CORPORATION BERHAD - MAY 2022 56
Slide 58: Investment in Edenor Technology – Plant Layout
INVESTMENT IN EDENOR TECHNOLOGY – PLANT LAYOUT MEGA FIRST CORPORATION BERHAD - MAY 2022 57
Slide 59: Investment in Edenor Technology – TPG Plant
INVESTMENT IN EDENOR TECHNOLOGY – TPG PLANT MEGA FIRST CORPORATION BERHAD - MAY 2022 58
Slide 60: Investment in Edenor Technology – Turnaround Strategy
INVESTMENT IN EDENOR TECHNOLOGY – TURNAROUND STRATEGY ▪ Full set of new management team in place. ▪ Major cultural and operational transformation underway. Key turnaround strategies: ▪ Simplify management processes: leaner, and more responsive and effective. ▪ Revamp purchasing, lower cost of goods/
Slide 61: Investment in Edenor Technology – Financial Outlook
INVESTMENT IN EDENOR TECHNOLOGY – FINANCIAL OUTLOOK ▪ Post-acquisition 2-month Consolidated Edenor earnings: ➢ Profit RM244 million (Including one-off unallocated bargain gain recognised as income) ➢ Loss RM6.6 million (Excluding unallocated bargain gain) ➢ Reduced 2-month loss despite maintenance s
Slide 62: Plantation
PLANTATION MONDULKIRI, CAMBODIA MEGA FIRST CORPORATION BERHAD - MAY 2022 61
Slide 63: Plantation Update
PLANTATION UPDATE 1) Background 2) Land 3) Plans • Main crops: coconuts & 50-year concession on 6,420 • Planned planting in 2022: 500- macadamia hectares 550 hectares Est. plantable area: 4,500 • Target to complete planting by • Cumulative investment as at hectares end of 2025. 31 Mar 2022: RM10
Slide 64: Plantation Update – Planting Philosophy
PLANTATION UPDATE – PLANTING PHILOSOPHY “RESPECT NATURE, WORK WITH NATURE” Water and irrigation key to sustainable cultivation: (i) Protect and improve O’plai River catchment areas to collect and store rainwater; (ii) Development wetland pockets, creation of mini lakes along extensive riparian cor
Slide 65: Plantation Update
PLANTATION UPDATE MFCB obtained approval from the Royal Government of Cambodia for the concession of a plot of land measuring 6,420 hectares situated in the Namlear Wildlife Sanctuary Zone, Mondulkiri Province, Kingdom of Cambodia for agricultural development. The term of the concession is 50 years,
Slide 66: Plantation Update
PLANTATION UPDATE Coconut planted fields MEGA FIRST CORPORATION BERHAD - MAY 2022 65
Slide 67: Plantation Update
PLANTATION UPDATE MEGA FIRST CORPORATION BERHAD - MAY 2022 66
Slide 68: Plantation Update
PLANTATION UPDATE Main nursery MEGA FIRST CORPORATION BERHAD - MAY 2022 67
Slide 69: Plantation Update
PLANTATION UPDATE South Division (natural) coconut Still photo of LPN West One seedbeds MEGA FIRST CORPORATION BERHAD - MAY 2022 68
Slide 70: Plantation Update
PLANTATION UPDATE Macadamia Trees MEGA FIRST CORPORATION BERHAD - MAY 2022 69
Slide 71: Plantation Update
PLANTATION UPDATE Roselle Quinoa Nanka Coffee Avocado Potatoes Passion fruit MEGA FIRST CORPORATION BERHAD - MAY 2022 70
Slide 72: Thank You
THANK YOU MEGA FIRST CORPORATION BERHAD - FEB 2022 71
Mega First Corporation Berhad — Q1 2022 Earnings Presentation on 6ix